(This article was originally published Monday)
--Rochdale Dividend and Income Fund seeks to deliver a steady
return, and then some
--Goals are to earn solid income from securities, primarily
through dividends, and provide stock returns
--The fund manager focuses on four areas to achieve goals
By Karen Talley
Stalwart dividend deliverers and the occasional diamond in the
rough make the Rochdale Dividend and Income Fund (RIMHX) a vehicle
that tries to deliver a relatively steady return, and then
some.
The fund's goals are to earn solid income from securities,
primarily through dividends, and also provide stock returns that
make money for investors. To achieve these goals, fund manager
David Abella focuses on four areas.
The stock must first have an attractive dividend yield--
generally above 3%--and can be a large-or mid-cap. The fund will
also look for "diamonds in the rough" in the small cap field, but
Mr. Abella notes these types of stocks don't tend to pay high
dividends.
To reduce risk, the fund seeks to make sure holdings can
continue paying dividends. "We look at how well the companies are
doing, how big the dividend is relative to money the company is
making and what are its business prospects going forward," Mr.
Abella said. Meetings with management are also part of the
drill.
The fund aims to hold companies that have a track record of
raising dividends and show they are growing as the economy grows,
Mr. Abella said.
Finally, Mr. Abella uses metrics like price to earnings and
price to sales ratios and book values to make sure the stock is
reasonably priced or even cheap.
The Rochdale Dividend and Income Fund rose 9.02% last year on a
total return basis, while the Standard & Poor's 500 Index
gained 2.1% on a total return basis. So far this year, the fund is
up 2.8%, while the S&P 500 has gained 6.8%.
"Last year was a tricky one due to credit concerns in Europe and
our strategy of buying stable, cash-generating companies held up
strongly in an otherwise difficult environment," Mr. Abella said.
Stocks that the fund picked up in 2011 and still holds include
McDonalds Corp. (MCD), Northeast Utilities (NU) Philip Morris
International Inc. (PM) and Mattel Inc (MAT).
This year, "the S&P 500 was off to a roaring start in [the]
first quarter and the higher risk names moved higher," Mr. Abella
said. "A lot of the higher quality dividend paying names just
didn't move a lot. But we still like these names because they have
a very steady yield and can do well in a better economy," which Mr.
Abella feels is slowly and steadily improving.
Wal-Mart Stores Inc. (WMT) is a large holding of the fund, at
1.8% of its portfolio. "It's got good cash flow and it's a bit of a
defensive play," Mr. Abella said. "If there are worries about the
economy not improving at a faster rate, then Wal-Mart picks up
sales from higher-priced competitors." Plus, Wal-Mart has a healthy
2.4% dividend yield, Mr. Abella said.
Dr. Pepper Snapple Group (DPS) is a stock the fund has been
buying this year. "In baseball terms, it's trying for just a base
hit," Mr. Abella said. "It's not a stock that necessarily will be a
home run but we see it providing a solid return." Mr. Abella also
said the stock's 3.3% yield will likely grow because the company is
putting a focus on its dividend program.
B&G Foods Inc. (BGS) "was a diamond in the rough for us, but
is now a steady performer," Mr. Abella said. The food company owns
brands including Cream of Wheat, Ortega taco shells, Molly McButter
and B&M beans. "They focus on holding the top brand in their
category and are run very efficiently," Mr. Abella said. "Plus,
they have a very good dividend yield of 4.5%."
National Retail Properties Inc. (NNN) is a Real Estate
Investment Trust that owns single structures and rents them to
operations like convenience stores, gas station or fast food
outlets. The REIT, with a 5.8% dividend yield, holds almost 1,500
properties in 47 states, "so they spread their geographic and
tenant risk," which makes the company a safer and more dependable
proposition, Mr. Abella said.
(Karen Talley covers the retail industry for Dow Jones
Newswires. She can be reached at 212-416-2196 or by email at
karen.talley@dowjones.com)
(TALK BACK: We invite readers to send us comments on this or
other financial news topics. Please email us at
TalkbackAmericas@dowjones.com. Readers should include their full
names, work or home addresses and telephone numbers for
verification purposes. We reserve the right to edit and publish
your comments along with your name; we reserve the right not to
publish reader comments)